Norfolk Southern lands bull rating from Barclays amid activist drama

Norfolk Southern Corporation (NYSE:NSC) tracked higher in early trading on Wednesday after Barclays upgraded the railroad stock to an Overweight rating after having it lined up with an Equal Weight rating. The firm thinks a management shakeup at the company could lead to notable share price gains.

Analyst Brandon Oglenski pointed to the recent activist investor actions and pressure on the board.

"Norfolk Southern has trailed industry profitability levels since 2015, and under the tenure of current CEO Alan Shaw, the margin gap has widened to nearly 600 bps (based on 2023 results)... We suspect investors have been frustrated with financial outcomes at Norfolk Southern for a while, as numerous changes and overhauls to the operating strategy have not led to any meaningful reduction in the profitability gap in the past few years."

Barclays assigned a price target of $305 to Norfolk Southern (NSC). Shares of NSC moved up 1.45% in premarket action to $257.48 vs. the 52-week trading range of $183.09 to $257.75.

Activist update: An investor group led by Ancora Holdings is calling for the ouster of Norfolk Southern (NSC) CEO Alan Shaw and has nominated eight candidates for the railroad operator's board, including former Ohio governor John Kasich. Ancora, which reportedly has a ~$1B stake in Norfolk Southern (NSC), also proposed a new management team led by Jim Barber Jr. as CEO and turnaround expert Jamie Boychuck as chief operating officer, according to a statement on Tuesday.